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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (31378)	7/4/2008 10:03:36 AM
From: Madharry	Read Replies (1) \| Respond to of 78487

One of my general concerns right now about stocks is that one can buy preferred shares and debt instruments of fairly respected companies yielding 9-10% now. That would seem to me to be very competitive with stocks and less risky. There is a real big concern with many of the reigional and community banks that they are heavily into construction loans as a percentage of risk capital. I wonder if anyone has a table about that. There is some acreage for sale in my neighborhood that is very choice but I would think that whoever bought it would have to hold it for 4-5 years before building on it as there is a glut of houses here on the market already and this is primarily a 2nd home owners market. I have just started to ask about potential financing for it and one bank i spoke to told me that the most they will lend on is 10 acres, and that most banks are not making lot loans at all anymore. would anyone else like to share their experience about this? also from another thread apparently the fdic put out a news release outline to what extent they provide insurance on bank accounts. the writer then goes on to say that they have never seen the fdic put out a release like that. it makes me wonder whether that is a negative omen of some kind. Happy 4th to all!

To: Paul Senior who wrote (31378)	7/15/2008 11:21:15 PM
From: Grommit	Respond to of 78487

ALD -- found this elsewhere. fyi. Morningstar doesn't cover ACAS, but these comments on ALD might give perspective: Allied Capital ALD Analyst Note \| Ryan Lentell \| 07-10-2008 We are reducing our fair value estimate for Allied Capital ALD as we believe the probability of near-term dividend growth is off the table, given the dramatic decline in the share price. The market is now placing an almost 20% cost of equity on Allied and other business-development companies, as demonstrated by the approximate 20% yield on most participants in the sector. At current market prices, Allied will not be able to raise equity, which is accretive to current shareholders by allowing it to increase its dividend. Therefore, we are reverting to our no-growth valuation level. We believe the current dividend is not in jeopardy at this time. Allied has sufficient spillover income to cover its entire 2008 dividend. Moreover, the firm has about $235 million in deferred installment sale taxable income, which is income that Allied has effectively forestalled by rolling capital gains from asset sales into bonds provided to purchasers of its investments. Effectively, this covers about 50% of Allied's 2009 dividend. Moreover, Allied is currently producing about $70 million in net investment income (excluding net realized investment income) quarterly, which covers 70% of the current dividend. We believe net investment income should expand as Allied reinvests capital into higher-yielding investments and earnings from fees on its three managed funds pick up over the next year. Thanks to the income Allied has yet to pay out and income it produces quarterly, it appears the current dividend is not in jeopardy. We believe the ultimate test for Allied and the other business-development companies will be how their underwriting holds up during the economic slowdown. If its underwriting fails, Allied could be forced to book large realized losses that could trigger a dividend cut. We will be closely watching the performance of Allied's assets as the economy weakens. As of March 2008, nonaccrual loans stood at a manageable amount of only 3.3% of Allied's portfolio of investments.